Philip Cornwall has written a piece in this week’s Football365 Opinion about the increased spending taking place in this year’s January transfer window.   Spending levels are roughly double of last January’s, a trend which he attributes to the perennial waves of hope and fear running through the Premier League, the former a result of being within reach of a lucrative Champions League spot, and the latter from being too close for comfort to the deadly bottom three berths.  But the point spread between clubs is tighter than in previous years which has intensified the fight for places, and in the case of the bottom clubs the fight away from certain places.

The most important point, which in my opinion Cornwall under-emphasizes, is that despite the increased spending on incoming players, it is an absolute certainty that three clubs will go down to the Championship next year.  No matter how much the average playing skill level of clubs goes up, three will lose.  Relegated clubs suffer drastically reduced income from no longer sharing the broadcast revenues of the Premier League, and if they spent big in January they will have suffered a serious blow to their finances.  In this ‘double whammy’ situation the club’s costs will have ballooned (player wages are the biggest expenditure for most clubs) while the top line has decreased, the worst possible time.  Simply, the club will have increased investment at exactly the time when it is least able to support that investment.

Roulette vs Poker

While there are mitigating circumstances to this analysis, such as parachute payments which do cushion the impact of relegation, the problem with panic spending in January remains clear.  If a club is in a precarious position coming into the new year, spending big on Messiah-like players is akin to a gambler betting it all on black in the hopes of making back losses, when the much better idea might be to stop playing roulette.  Certain owners, boards, managers et. al. continue spending because they view football as a single pitch of the dice when it should be viewed as an ongoing game of poker (except there is no folding and hence no bluffing).  If you start with a weak hand/squad wagering large sums on it during each round of betting would be stupid as you stand little chance of winning.  The best idea is to avoid putting any money in the hand altogether and wait until another round/season until the cards are more in your favor.

Of course this is not a perfect analogy as player transfers allow you change the composition of your team and would be the equivalent of paying to change the cards in your hand.  In this situation a very rich player (say some Russian oil billionaire, or Arab oil billionaire) could probably buy all the right cards/players in the deck to construct the best hand.  But for the most part we have to assume that players are working with budgets that eventually have to conform with reality and cannot completely rearrange their hands every time.

Mutually Assured Financial Destruction

What Cornwall has described is an arms race in the Premier League.  The most famous arms race was the nuclear buildup between the United States and the USSR in which both sides spent billions of treasury to pile up enough nuclear weapons to incinerate the Earth hundreds of times over.  The key consequence of an arms race is that neither competitor benefits from the struggle for relative dominance over the other.  In the Premier League when relegation threatened clubs spend they increase the psychological pressure on close competitors to spend in order to counterbalance the threat to their survival.  Bottom table clubs are often there for a reason, mismanagement is a factor or the squad is simply not good enough to compete in the top-flight; signing one or two superstar players are unlikely to change the club’s league position that year but it is likely to change its financial fate.  The outrageous wages often needed to tempt marquee players to bottom table clubs (or ambitious clubs, see Portsmouth) have wrecked more than one Premier League balance sheet.

Arguably, exciting player signings do benefit two groups: supporters and player agents.  Bringing big names in gives a temporary boost to club status and hopes for better times.  However supporters should realize that the last ditch signing to stave of relegation this season often comes at the price of stability in the seasons ahead.  It is a difficult to accept that it might be the better decision to finish the season with the existing squad and come back up the next year, but that decision is wrongly conflated with conceding defeat.  Of course there are always some transfers to be had at the right price in January, and clubs that have recovered form after the new year, but there is merit to the strategy of keeping costs low and returning to the Premier League stronger in two years after wisely investing the top-flight windfall.

The January transfer race is a tempting gamble for owners and managers, but they should understand that choosing not to participate will probably benefit the financial stability of their club and increase the likelihood and length of future stays in the Premier League.